Trading at around $76,200 in the meantime, Bitcoin is at its lowest level in over a week. At the latest now, the massive price euphoria has given way to a sober perspective. Investors are increasingly finding themselves confronted with suppressed monetary and geopolitical concerns. The uncertain situation in the Middle East is evidently not stopping at Bitcoin. The $80,000 mark currently appears to be proving too ambitious.

Bitcoin price chart on a monthly basis

Political tailwind from Washington: Investors hope for easing of regulatory thumbscrews by Donald Trump

The triad of political tailwind from Washington, a calming pill for the US bond market, and the successive unwinding of short positions had increasingly boosted the crypto market over the past 10 days. Trading at well over 81,000 dollars per unit last week, Bitcoin reached its highest level since May. In particular, the recent crypto summit at the White House and the associated hope for a loosening of regulatory constraints were grist to the mill for investors. Investors are primarily expecting more clarity on existing regulations, which will further advance the mainstream acceptance and thus the adoption of the asset class. Co-responsible for the rapid price increase is likely to have been a so-called short squeeze. Investors who had bet heavily on falling prices found themselves increasingly forced to close out their short positions. The resulting dynamics significantly amplified the upward momentum.

„Fed Watch Tool signals potential rate hike for September meeting

One of the central topics of discussion in the market also remains monetary policy developments. The CME Group's so-called „FedWatch Tool“ currently indicates that 64.2 percent of market participants expect a 25-basis-point interest rate hike at the next scheduled Fed central bank meeting on September 16. In contrast, 35.8 percent expect a pause in rate hikes.

The prospect of further rising capital market interest rates increases the opportunity costs of holding non-interest-bearing assets like Bitcoin, which can be detrimental to riskier assets. In addition, Fed Chair Kevin Warsh had pointed to inflation risks at the recent central bankers' summit in Jackson Hole (Wyoming), thereby escalating interest rate concerns overall.

The geopolitical conflict between Iran and the US has also increasingly returned to the radar of market participants. Both warring parties recently attacked each other again, bringing the smoldering risks to the surface. For the first time in weeks, the war involving Iran has thus escalated militarily once more. In recent weeks and months, Bitcoin has reacted more strongly to new developments in the Middle East. However, the fact that the really massive waves of selling are failing to materialize could indicate a certain resilience to the geopolitical risks between Washington and Tehran.

Outlook: US labor market data casts a shadow ahead

On Friday afternoon, investors are focusing in particular on the US labor market data (non-farm payrolls) at 2:30 PM, which need to be examined for clues regarding monetary policy. Better-than-expected job data could further intensify existing concerns about interest rates. Economists expect a job growth of 58,000 units outside of US agriculture, after a total loss of 23,000 units was reported in July. A weakening labor market, on the other hand, could deprive the Fed of arguments to raise interest rates at the September meeting.